Africa Agriculture Status Report Commends GIRSAL for expanding farmer access to loans in Ghana

AGRA President Dr. Agnes Kalibata and Vice President of Tanzania Dr Philip Isdor Mpango launching the report
AGRA President Dr. Agnes Kalibata and Vice President of Tanzania Dr Philip Isdor Mpango launching the report

The Africa Agriculture Status Report (AASR) 2023 has commended the Ghana Incentive-Based Risk-Sharing Scheme for Agricultural Lending (GIRSAL) for its role in improving food systems by helping make loans available to Ghanaian farmers.

The 218-page report which was launched at the Africa Food Systems Forum (AFSF) 2023 in Dar es Salam, Tanzania, observes that blended finance facilities that unlock private capital through public capital facilities have helped to address some of the constraints related to agricultural finance in Africa.

It identifies GIRSAL, a scheme of the Bank of Ghana and African Development Bank (AfDB) that de-risks Ghanaian commercial bank agricultural loans, as one of such finance facilities in Africa.

GIRSAL Ltd. is a non-bank financial institution working to de-risk agricultural financing by financial institutions through the issuing of agricultural credit guarantee instruments and accompanying measures that enhance the capacity and appetite to provide credit to the agribusiness sectors.

The report says GIRSAL was capitalized with GHS 200 million from the Bank of Ghana and USD 13.6 million from the Ministry of Finance through funding support from the AfDB but operates at arm’s length of government. GIRSAL has four operational pillars: a credit guarantee scheme for agricultural loans; a bank rating system; a knowledge portal; and a technical assistance facility. It is the combination of these elements that makes the GIRSAL model attractive to financial institutions.

The report says since 2019, 28 financial institutions have signed agreements with GIRSAL for the guarantee facility. Sixteen of them have cumulatively disbursed USD 72 million worth of loans with GIRSAL guaranteeing over 100 agribusinesses mainly in the crops and input sector. Loan losses to date are less than 0.5 percent. GIRSAL is led by former USAID advisor to the Ministry of Food and Agriculture, Kwesi Korboe.

The AASR is commissioned annually by AGRA to provide an assessment of Africa’s agriculture and recommend the way forward. The 2023 report, themed, Empowering African Food Systems for the Future, was launched by AGRA President Dr. Agnes Kalibata and Vice President of Tanzania, Dr. Philip Isdor Mpango at the ongoing AFSF.

Ghana’s high and low marks in the report
The report says the integration of digital technology into African food systems has shown promising advances in recent years in places like Ghana. Several African startups such as AcquahMeyer Drone Tech in Ghana, offer drone-based services to farmers. Using drones to map fields, monitor crop health, and guide interventions is becoming more popular. Ignitia Ghana has also partnered with other institutions to deliver weather forecast information to farmers via SMS. The flagship product is a 48-hour forecast message delivered daily via SMS directly to the subscriber’s phone. Ignitia employs supercomputers to provide real-time weather forecasts to farmers. The information equips farmers to make short- and long-term production decisions. A study found that Ignitia’s digital tool has helped change the timing of harvest and application of chemicals indicating improved farming practices and consequently improving on-farm technical efficiency.

The report says studies conducted in rural Niger and Ghana have found that digital agricultural extension programs can improve farmers’ production and sale decisions, coordination across value chains, and farmers’ negotiations with traders. Digital agricultural extension programs have also helped foster the adoption of efficient or innovative production technologies thus translating to positive impacts at both on-farm and off-farm levels. Combined with improved seeds, well-trained and equipped extension agents in Ghana helped rice farmers increase yield by 345 kilograms per hectare on average compared to non-beneficiary farmers in the 2019 harvest season.

The report also notes that several African countries including Ghana, Rwanda, and Ethiopia are making meaningful progress towards enhancing the resilience of livelihoods and production systems to climate variability and other related risks. It says Ghana, Nigeria, and Mali stand as potential agricultural powerhouses for improving the production and productivity of staple crops to attain higher food nutrition and security outcomes in the sub-region. It also commends Ghana, Nigeria Senegal, and Mali for embracing transformative measures in rice, maize, cassava, livestock, and fisheries production, and for initiating irrigation projects to harness the region’s water resources and enhance agricultural productivity.

The report commends Ghana for being one of about 11 African nations among 100 countries worldwide that have published food-based dietary guidelines. Ghana integrated dietary-related factors into its national non-communicable disease (NCD) policy. The country declared limitations to salt, fat, trans fat, and added sugar in processed food and food served in restaurants. Some legislative actions were taken to regulate the accuracy of the nutritional content declarations. It also commends Ghana for developing national food systems-based investment plans using the pathways towards sustainable food systems. The plan contains a set of complementing integrated priority investments in food production and processing, health, and nutrition as well as investments that sustain the natural capital of the countries.

The report however expressed concerns Ghana is home to various conditions that may undermine West Africa’s real market access under the Africa Continental Free Trade Agreement. “Excessive number of checkpoints slow down the movement of goods and often lead to the extortion of illicit fees from drivers at these various checkpoints,” the report observes.

“In a recent fact-finding mission during the fourth quarter of 2022, Ghana Shippers Authority reported 83 checkpoints between Tema and Bolgatanga along its main Northbound corridor, including 67 for Police, 7 for Customs, 5 for Immigration and 4 for the Forestry Commission within a distance of less than 500 miles,” the report adds.

The report also observes poor handling, transport, storage, and processing have been estimated to account for 20-65 percent post-harvest losses of tomatoes in Ghana. This explains the persistent volatility of the price of tomatoes on the local market especially in the main urban and coastal areas of the country.

Joseph Opoku Gakpo

Chief Editor

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